Inventory balances for Balmer Company in April 2018 are as follows: $$\begin{array} { l c c }
& \text { April 1,2018 } & \text { April } 30,2018 \
\text { Raw materials } & \$ 40,000 & \$ 35,000 \
\text { Work in process } & 67,500 & 59,800 \
\text { Finished goods } & 150,000 & 120,000
\end{array}$$ During April, purchases of direct materials were $58,000. Direct labor and factory overhead costs were $82,000 and $110,000, respectively.
Prime costs for April were:
A)$145,000.
B)$140,000.
C)$88,000.
D)$152,700.

Question

Inventory balances for Balmer Company in April 2018 are as follows: $$\begin{array} { l c c } 
& \text { April 1,2018 } & \text { April } 30,2018 \
\text { Raw materials } & \$ 40,000 & \$ 35,000 \
\text { Work in process } & 67,500 & 59,800 \
\text { Finished goods } & 150,000 & 120,000
\end{array}$$ During April, purchases of direct materials were $58,000. Direct labor and factory overhead costs were $82,000 and $110,000, respectively.
Prime costs for April were:
A)$145,000.
B)$140,000.
C)$88,000.
D)$152,700.

Quizplus · Accepted Answer

Prime costs consist of direct materials and direct labor. Direct materials used can be calculated as: Beginning raw materials + Purchases - Ending raw materials = $40,000 + $58,000 - $35,000 = $63,000. Adding direct labor costs of $82,000 gives prime costs of $63,000 + $82,000 = $145,000.

Inventory Balances for Balmer Company in April 2018 Are as Follows